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Adjustment Speed Of Debt Maturity: Evidence From Financial Crises In East Asia

Author

Listed:
  • Hasan Tekin

    (Karabuk University)

  • Ali Yavuz Polat

    (Abdullah Gul University)

Abstract

We investigate the change in adjustment speed of debt maturity for East Asian firms between 1990 and 2017 by including two exogenous shocks: the Asian Financial Crisis 1997-1998 (AFC) and the Global Financial Crisis 2007-2009 (GFC). We employ the least square dummy variable correction and find that East Asian firms have a slower adjustment of long-term debt over time. Besides, the decrease in adjustment speed of long-term debt after the GFC is more compared to the decrease after the AFC. Further analysis shows the optimal debt maturity differs across countries and industries. Another important implication of our results is that firms in high governance countries are more likely to close the gap between the actual and target debt maturity in time. Overall, debt holders and investors should consider financial uncertainties.

Suggested Citation

  • Hasan Tekin & Ali Yavuz Polat, 2021. "Adjustment Speed Of Debt Maturity: Evidence From Financial Crises In East Asia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(1), pages 71-92, March.
    • Handle: RePEc:idn:journl:v:24:y:2021:i:1a:p:71-92
    DOI: https://doi.org/10.21098/bemp.v24i1.1287
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    More about this item

    Keywords

    Adjustment speed; Asian crisis; Debt maturity; East Asia; Global financial crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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